Why did the switch from the "cash-and-carry" to the "lend-lease" system represent a retreat from isolationism & neutrality by the US?

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brettd's profile pic

brettd | High School Teacher | (Level 2) Educator Emeritus

Posted on

At the time, President Franklin Delano Roosevelt had, in his own mind, abandoned isolationism, but knew it would not be politically possible for us to enter the war.  Events in the war itself forced his hand and led us to back away from isolationist policy and to more directly aid the British and other allies.

Cash and Carry served a dual purpose for us: we could offer military aid to Britain to fight Nazi Germany for us, while at the same time providing the key industrial jobs that would help us claw our way out of the Great Depression.  We could honestly claim the arms trade was just business, and that we weren't biased towards any one side or the other, even if that wasn't really true. This was pretty shrewd on FDRs part, although it was short lived.  The British quickly ran out of cash, and German U-Boat attacks led to a shortage of both cargo and escort ships as well.  Soon we would have to choose how interested we were in seeing the allies survive.

Lend-Lease was a much bigger gamble on our part, as we manufactured the war material and more or less gave it to Britain and later the Soviet Union, on their promise to pay us back, which they never did.  Then we escorted some of the convoys with American warships, a few of which were later sunk, drawing us closer to conflict with Germany and prompting Hitler to declare war on us after the attack on Pearl Harbor gave him the opening.  Lend-Lease was a very necessary policy, but involved us much more directly in the war, and eventually was one of the factors leading us to war against Germany.

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

This is because the Lend-Lease program involved the US much more in the affairs of the countries who were at war -- it gave the US a reason to care who won.

In the cash and carry system, countries could buy stuff from us if they paid cash and carried the stuff away in their own ships.  That way, no one would owe us money and so we would not care if they won the war.  (If they owed us, we would want them to win so they could repay us.)  Also, since they were using their own ships, our ships wouldn't be in danger of getting sunk.

But with Lend-Lease, we started having a stake in the war.  We chose to "lend" money to the British and Soviets, really knowing that they probably wouldn't be able to repay.  In other words, we were taking on ourselves the responsibility of paying for their involvement in this war.

So we went from a policy designed to keep us neutral to one where we paid for one side's war effort.  Big difference.

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